The Cargo Container Tracking System

1
The Cargo Container Tracking System

• Project Members
• Andrew D. Nikow
• Project Leader
• Michal Kosinski
• Parminder Singh
• Michael Stabile

http//koala.ece.stevens-tech.edu/sd2k01/grp6
2
Overall Project Requirements

• Our primary goal is to construct a prototype
  transponder and gate reader system by Spring of
  2002
• Additionally with the prototype be able to
  exchange information from transponders to gate
  while in motion
• Ideally prototype systems can be constructed
  using off-the-shelve components and development
  kits
• Ideally we would like to develop a standardized
  system that can be developed to new and(or)
  retrofit applications
• Extensions of this system could include a
  service-oriented tracking and tracing application

3
Contract Deliverables Status Report

• Business Model- Service and Product Model
  Complete
• Cost Estimation- Modeling
  Complete
• Product price- Research And Analysis Complete
• Design Economics- SEED Model Evaluation Complete
• Financial Leveraging- Evaluation
  Complete
• Break-even Analysis- Evaluation
  completed
• Sensitivity Analysis- Evaluation
  completed

Incomplete Underway Complete
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Completed Deliverables Summary

• Business Model Based on Product and Service
  implemented in analysis
• Research data based on similar product
  development (Labor rates, equipment costs, taxes
  ,etc.) completed and integrated into final
  analysis
• SEED Model utilized to analyze both business
  models under various conditions of financial
  leveraging
• Break Even Analysis and Sensitivity Analysis
  completed based on Financial leveraging
  conditions
• Overall Evaluation on project worthiness
  complete.

5
Business Model CCTS Product
6
Business Model CCTS Service
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COST Estimation Results

• Type of Costs and their Range of Accuracy / -
  10
• Improved accuracy based on real data collected
  from similar product developments
• Manufacturing plant (based on square footage /
  space utilization)
• Equipment (production rate and machinery usage)
• Operating Costs
• Fixed costs (taxes, utilities, supplies,
  advertising)
• Variable costs (labor, materials, overhead)
• Loan Expenses and Leveraging (interest, amount
  borrowed)

8
Project Cost Information (1)

• Market Size
• Total Container Fleet worldwide is 13 million
  TEUs. (possible estimate 9 million units)
• Total Chassis Fleet worldwide is 900,000 units.
• Units Sold (based on 7-year lifespan of a cargo
  container)
• Inflation Rate of 4 Considered in analysis

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Project Cost Information (2)

• Wireless Transponder
• Initial number of units sold 15000 with 30
  increase in sales each year. (at end of 10years
  product covers 9-10 of market share)
• Price 60 25 labor 12 materials 55
  overhead.
• Wireless Gate Reader
• Units are not sold used by the company with
  initial of units produced 150 and yearly
  increase of 10
• Cost of manufacturing 430 50 labor 220
  materials 60 overhead (maintenance).
• Tracking Service
• Units served is equal to the number of units sold
  that year plus the number of units sold up to
  current year (with assumption that 7 years is the
  life span and that about 2 of containers will
  not require tracking that year)
• Price 100/year 40 labor 0 materials

10
Design Economics

• Seed Model Results No Borrowed Capital
• NPV 1,340,088
• IRR 44.51 - very good and higher than 25 MARR
• Positive operating cost (EBIT) each year after
  year 3 (that is very good)
• Competitive prices in regards to competition
• (Qualcomm charges 600 per unit 250 per month
  per driver service fee) Source CIO Magazine -
  June 15, 2000

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Design Economics

• Seed Model Results Borrowed Capital
• NPV 1,254,450
• IRR 46.85 - very good and higher than 25 MARR
• Positive operating cost (EBIT) each year after
  year 3 (that too very good)

12
Financial Leveraging

• Using SEED model most economical case
• Initial capital investment 2,150,000
• Initial borrowed capital 200,000 at _at_12 APR
• Debt Ratio 9
• Increase in borrowed capital returns slightly
  higher IRR but brings higher risks (much
  greater debt ratio)

13
Revenues

• Wireless Transponder Unit
• Revenue (EOY 10) 56,032,630
• Wireless Gate Unit
• Revenue (EOY 10) 1,033,290
• Tracking Service
• Revenue (EOY 10) 278,244,975

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Break Even Analysis

• Break Even Point occurs at middle of Year 3
  after approximately 64 million in sales.
• Revenue Surpasses Operating Expenses Almost
  immediately

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Sensitivity Analysis

• Most sensitive Revenue to IRR
• Also Expenses are very sensitive

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Venture Funding Analysis

• Using Income Statement (SEED output) company can
  use economical leverage for funding
• Positive Factors
• Large market
• Available technology
• Establishment of a large customer base
• Good earnings forecast
• High rate of return (IRR high)
• Possible angels
• Transport / equipment leasing companies
• Government (tracking of hazardous materials)
• Military

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Conclusions of Economic Analysis

• Project is Highly profitable
• Marketplace exists for product
• High Demand for this type of product
• Very competitive against existing current
  products
• Economic Analysis yields positive figures of
  merit, exceeding minimum rates of return
• Minimum investments would return significant
  income.
• Successful implementation of product will yield a
  highly lucrative Service component.
• Service component, based on successful deployment
  of tracking system products will provide a
  substantial sustainable source of income.
• Creation of wide and substantial customer base.
• Great Expansion Opportunities.
• Ability to introduce and expand new products into
  this customer base.
• Global expansion capacity

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QUESTIONS?
Pictures courtesy Interpool Inc.
http//www.interpool.com
CCTS Project Andrew D. Nikow Project
Leader Michal Kosinski Parminder Singh Michael
Stabile